Economy Update – Baghdad
Oil prices experienced a decline during early trading on Wednesday, following a report indicating an increase in U.S. crude oil inventories. This uptick magnified concerns regarding potential customs duties that may impact market sentiments, effectively offsetting the gains observed over the preceding three days, which were fueled by escalating tensions in the Middle East and tightening sanctions.
By 0130 GMT, Brent crude futures had decreased by 36 cents, marking a 0.47 percent drop, settling at $76.64 per barrel. Conversely, U.S. West Texas Intermediate (WTI) crude futures fell by 37 cents, or 0.5 percent, to $72.95 per barrel.
This decline interrupted a three-day surge in prices, where Brent crude had rallied by 3.6 percent and WTI by 3.7 percent.
According to data from the American Petroleum Institute released on Tuesday, U.S. crude oil stocks, the largest globally, increased by 9.4 million barrels for the week ending February 7.
Additional figures from the American Petroleum Institute highlighted a reduction in gasoline stocks by 2.51 million barrels and a downturn in distillate products by 590,000 barrels.
Data from the U.S. Energy Information Administration is expected to be published later on Wednesday.
The price drop was also attributed to apprehensions surrounding Washington’s potential imposition of customs duties, which could adversely affect global economic growth and energy demand.
However, the market remains vigilant regarding supply tightness, mitigating losses. Recent warnings from Israeli Prime Minister Benjamin Netanyahu and U.S. President Donald Trump highlighted that the ceasefire in Gaza could come to an end unless Hamas releases Israeli hostages by Saturday, stirring fears of renewed violence that could destabilize the Middle East, a crucial region for oil production.
This market unease contributed to a more than one percent increase in oil prices on Tuesday, alongside U.S. sanctions disrupting Russian oil flows to both China and India, as well as Trump’s “maximum pressure” campaign on Iranian oil supplies.